No name advisers make the big time
Friday, March 19th 2010, 12:45PM 
4 Comments
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On 19 March 2010 at 10:48 pm Frank said:
We saw Versalko out walking his dog with his wife and they looked like your normal married couple. I know he has broken the law and ripped the bank off but I guess he had a problem with addction to greed re money and apparently other things....six year in the klink will be tough for a white collar crim! On 20 March 2010 at 9:27 am David Whyte said:
The general question of corporate governance and regulation remains an issue in NZ. The process of internal bank audit in Australia, for example, would more than likely have picked up the errant ASB adviser's practices. The question for ASB is this:- why were CBA internal audit practices not extended to their NZ subsidiary? The probable answer is cost-related and holds little validity in the face of subsequent events.
On the governance front, the pleas of ignorance by Banks and Brash over the Hujlich "failure to disclose" reveals more myopia and inertia on the part of regulators and their political masters with corporate governance in NZ.
The accountability distance between executive and non-executive directors in other countries is closing. Liability and responsibility is becoming the unavoidable duty of a company director - of whatever description - and the sooner NZ adopts this approach, the sooner we can minimise the opportunity for malpractice, fraud, and misleading actions which cause public grief.
The issue of expense will be raised again, but the cost of being in business contains fundamental responsibilities which have to be met, and meeting the cost of retaining competent, effective, and attentive directors should be one such basic responsibility.
It's true that you can't legislate crime out of the financial markets, but you can, with prudent regulation and sensible supervision, reduce the chances of success for opportunists, crims, and others intent upon scamming the public, or claiming ignorance in the face of inappropriate executive behaviour.
On 21 March 2010 at 9:23 am Independent Observer said:
It is appalling to read of prominent Hujlich Directors pleading ignorance, with the Regulator seemingly adopting the "oh well - no one was hurt" attitude. Where were the Trustees in this example (or the auditors in the ASB example)?
Both the Hujlich and ASB examples demonstrate poor institutional governance, below average Regulatory response, and a jaundice judicial structure (although I'll argue that point another day). 12 months ago I argued that the Morningstar summation of the NZ financial services industry was grossly out of line. Following these recent cases, I'm not so sure that it was.
For those industry participants who remain at ease with these recent breaches in client trust, you may wish to reflect on the damage that is being created for all of us. As an industry we should be aggressively lobbying the Regulators to uphold the principals of fiduciary responsibility for Directors and industry participants. In the absence of any collective voice (as the FPA appears to have lost its mojo), we are left to lobby individually.
It will remain a tough battle to reinstate industry confidence with consumers until the underlying virtues of trust and competence are reinforced by the watch dogs.
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I enjoy a long standing relationship with Spicers Portfolio Management Ltd.In all cases when I have money to invest,I am obliged to pay over the underlying funds to a nominated Trustee Company which in turns remits them to Spicers.This process removes the opportunity for Spicers
advisers or others to get their hands on the money.
It occurs that had ASB followed this procedure, Versalko would not have had the opportunity to be the perpetrator of this massive fraud.